Professional Documents
Culture Documents
The Balanced Scorecard is an approach to measurement. The term was coined by Robert S. and
David P. Norton in an article titled "The Balanced Scorecard -- Measures that Drive
Performance," that appeared in the Jan/Feb 1992 issue of Harvard Business Review.
The balanced scorecard is a management system that enables organizations to clarify their vision
and strategy and translate them into action. It provides feedback around both the internal
business processes and external outcomes in order to continuously improve strategic
performance and results. When fully deployed, the balanced scorecard transforms strategic
planning from an academic exercise into the nerve center of an enterprise. The relationship
between Mission, Objectives, Strategy and Performance Measures is depicted below:
About half of major companies in the US, Europe and Asia are using Balanced Scorecard
Approaches. The exact figures vary slightly but the research groups suggest that over 50% of
large US firms had adopted the BSC by the end of 2000. A study finds that about 44% of
organizations in North America use the Balanced Scorecard and a study in Germany,
Switzerland, and Austria finds that 26% of firms use Balanced Scorecards. The widest use of the
Balanced Scorecard approach can be found in the US, the UK, Northern Europe and Japan. In
corporate India, the Balanced Scorecard adoption rate is 45.28 %.
In just six months, the Army’s scorecard effort gained remarkable ground for an organization of
such heft, reach, and complexity. Within that time frame, the Army built its “Level 0”
(enterprisewide) scorecard. Then it cascaded the scorecard to “Level 1” (36 major commands,
secretariats, and staff areas, such as Medical Command, Logistics, and Forces Command) and
“Level 2” (250 subordinate commands that support the Level 1 organizations). Result: more than
300 scorecards — each of them linked to the Level 0 master. Though the Army’s scorecard
implementation has just begun, the organization is already seeing some promising changes.
2. Higher education institutions have embraced the balanced scorecard as a way to remain
competitive in a rapidly evolving sector dedicated to providing quality education to students and
creating research incubators for professors. This example of a balanced scorecard shows how the
balanced scorecard has permeated into each department to coordinate the delivery of quality
education.
5. In case of corporate alliance, the balanced scorecard management system can help
companies switch their alliance management focus from contributions and operations to strategy
and commitment. Brussels based Pharmaceuticals Company Solvay, has formidable
competencies in the drug discovery process. But the average cost of bringing new drugs to
market has escalated to more than $1 billion per successful compound, making it harder for
Solvay to capitalize on its research skills. Clinical trials require access to patients, physicians,
and health care organizations, areas where Solvay has less of an advantage. Executives believed
that Solvay could be more efficient and achieve better results if it could outsource the
management of all clinical trial work to a single partner. Solvay began the transition to this
model by choosing Quintiles, one of its existing suppliers, to perform all stages of the trial
process. In 2001 the two companies moved from a transactional relationship to a preferred
partnership. Under the terms of the agreement, Solvay consolidated a significant number of its
outsourced projects under Quintiles in return for reductions in Quintiles’s normal prices. The two
companies formed a joint clinical team for each compound in order to manage strategic and
operational aspects of conducting clinical trials.
Here is a chart to present the strategy map to manage execution of their alliance strategy:
Living the alliance: Ensure that we have the right culture (including trust), communication,
leadership, people development, IT, and rewards and recognition.
Collaboration: Create the transparency we desire and make the best use of resources and services
across organizations and third parties.
Speed and process innovation: Do things right; leverage our global expertise; and improve the
start up and management of studies to achieve breakthrough results.
Growth: Create the right portfolio of new products; collaborate on decisions to develop
compounds; improve investment management; and accelerate the flow of compounds into the
clinical development phase.
Value for both: Create value for both organizations by jointly driving all these activities.
The example above describes the experience of using balanced scorecard techniques to create
alliance value. But this experience is not unique. Infosys, the Indian IT services provider, has
built more than two dozen “relationship scorecards” with customers and uses these in quarterly
meetings with executives in its client organizations.
The implementation of the Balanced Scorecard as a performance management tool & as well as a
strategic management tool, has led to the identification of cost reduction opportunities in the
organization, which, in turn, has resulted in the improvement in the bottom line.